The U.S. Small Business Administration issued a one-page application form designed to make it easier for applicants to complete the application process for forgiveness of Paycheck Protection Program loans, together with updated and revised forms to conform to the requirements of the latest stimulus legislation.
Congress approved the COVID-19 relief package last month and included $284 billion of financing to small businesses in need of loans. The funds were used to mitigate the economic effects of the coronavirus outbreak. The package also mandated the SBA to issue simplified forms within the first 24 hours after the legislation was adopted to make the process of applying for forgiveness. It also included conditions meant to encourage more bank loans by community banks, specifically for minority-owned companies that had trouble getting loans in the past.
“The Small Business Administration met the requirements to release the one-page form for loan forgiveness under the PPP within 24 hours of the date of enactment of the Consolidated Appropriations Act, 2021,” wrote Ed Zollars who is a partner of Thomas, Zollars & Lynch CPAs on his Current Federal Tax Developments blog for Kaplan Financial Education. “The agency also published the updated forms.”
First Draw PPP Loan forgiveness terms
Trump’s Student Loan Forgiveness Plan – First Draw PPP loans made to borrowers who meet the criteria are eligible for total loan forgiveness within the 8 to 24 week period that follows the loan’s disbursement
- The same goes for the pay and benefits for employees.
- The proceeds of the loan can be used to cover payroll costs or other eligible expenses.
- Minimum 60% of proceeds go to expenses for payroll
Second Draw PPP Loan forgiveness terms
Second Draw PPP loans to qualified borrowers are eligible for loan forgiveness when the loan is repaid within an 8to 24 week time frame.
- The First Draw PPP loan requires that the employee and compensation levels be maintained in an identical manner.
- The loan proceeds are spent on payroll expenses and other eligible expenses; and
- Minimum 60% of profits go towards payroll costs
- How to apply for loan forgiveness and the time to apply
A borrower may apply for forgiveness only after all loan proceeds to which the borrower wants forgiveness have been used. The borrower can apply for forgiveness at any time up to the date at which the loan matures. Borrowers who don’t request forgiveness within 10 month after the date they will be able to repay the loan are able to receive payment from their PPP lender.